BKM Wealth Quarterly Update

BKM Wealth Quarterly Update

December 2022

 Welcome back to 2023 – we hope you enjoyed the festive season! As we start a new year, BKM Wealth encourages you to use this as an opportunity to reflect, but more importantly, to look ahead into 2023 and emphasise some of your personal financial goals and planning. 

To start with a quick reflection, let’s not sugar-coat the fact that 2022 was a challenging year for investments. The bottom-line performance for most assets were disappointing, with cash beating bonds and global stocks. In such an environment, all investors have suffered—if they haven’t, they should consider themselves very lucky—especially with interest rates and inflation creating the cost-of-living crisis. Even in professional circles, it was often a question of who preserved the best, with the vast majority of assets falling in value. This is without considering some of the mind-boggling headlines from Cryptocurrency assets and businesses! 

 Interest Rates and Inflation will remain an important factor for Investment markets, but more acutely for those with Mortgages and households watching the budget as prices increase noticeably. These factors and the news reporting cycle that clings to every changing number are mostly beyond our control and influence. It does however promote the importance of the basics of Financial Planning – have a budget and stick to it and make sure you update your Financial Plan to respond to any changes in your situation and / or these external factors. 

At the start of each year, we encourage you to review your Financial Plan or your Lifestyle Goals. Grant, Murray and Tania wish you the best of Health and Wealth over 2023. We are always just a phone call away. 

True wealth is having your health and knowledge of self.

Benjamin Franklin

Investment Markets 

Since the downbeat assessment in our September 2022 quarterly report, we have witnessed a solid uptick in share markets, while bonds (fixed interest) have also been able to generate some positive performance. Overall volatility has moderated. 

The recent decline in inflationary pressures in the US is providing a positive backdrop for both shares and bonds, with expectations that central banks (namely the US Federal Reserve) will start to moderate the size of its rate rises. China’s removal of its zero covid policy and growth focus has also assisted market returns. 

On the domestic front, whilst most economists expect the RBA to keep raising interest rates, some have started to entertain the possibility of an interest rate pause at their February meeting, given housing and other economic data continues to show a deceleration in the growth outlook. 

After two years, this week sees the return of an ‘in person’ World Economic Forum in Davos. The theme for the event is ‘Cooperation in a Fragmented World.’ It’s clear that inflation, geopolitics (Russia, US/China relationships), global trade and rebalancing of global demand/supply chains will be major themes along with new areas such as the increasing regulation of crypto markets given the massive collapses of crypto exchanges through the back end of 2022. 

Data effective 16th January 2023* 

*Data and selected investment market commentary provided by Infinity Asset Management Pty Ltd.